Westland Milk Products posted record sales in 2022 and is firmly back in the black.
According to the Chinese-owned company, revenue jumped 27% year on year in the 12 months to December 31 to $1.04 billion. Profit was $39 million versus a loss of $82.2m in calendar 2021.
“This is the first time in our company’s 85-year history that we have surpassed the $1bn revenue mark,” Westland chief executive Richard Wyeth said.
Inner Mongolia Yili Industrial Group bought the cash-strapped West Coast dairy company in August 2019 for $588m, including debt and liabilities. It has been operating in New Zealand since 2013 when it bought Oceania Dairy.
“Having the support of Yili has enabled us to invest in our people and the infrastructure needed to increase production and sales of value-added products,” he said.
The financial performance was well ahead of company projections, and Wyeth is optimistic about maintaining momentum and growth for Westland, despite ongoing international inflationary pressures and overall reductions in milk supply across NZ.
Westland continues to pay farmers a 10 cent premium above the forecast Fonterra payout, contributing $535m into the West Coast and Canterbury economies through milk payments to farmers in 2022.
Westland is able to pay farmers a record price of $9.40 per kilogram of milksolids (kg MS) in 2022, but it will continue to take a cautious approach in managing costs to ensure it can continue to pay a premium for milk, he said.
Wyeth said the company’s strategy of focusing on high-value product sales, leveraging off the West Coast’s reputation as a source of premium dairy products and ingredients, is now paying dividends.
“The biggest contributor to increasing revenue has been our high-value product strategy and to some extent high global commodity prices but right across the business we have focused on doing everything well,’’ he said.
Wyeth noted, however, “customers willing to pay a premium for high-value products have high standards”.
The company is working with its entire supply chain to ensure it can demonstrate “these standards so that our customers can see for themselves the value of our ingredients and products”.
Westland said it processed an 11% increase in milk solids year on year. This supported an operational cash conversion cost saving of 10% year-on-year, equivalent to about $18m.
Regarding Westland’s acquisition of North Island butter processor Canary in 2022, Canary posted a 28% revenue increase over budget forecasts and increased profit by 129% ahead of budget for the year.
“Overall, the business is well-placed for 2023. Our value-added strategy is going from strength to strength, our recent acquisition of Canary has gone extremely well, and our consumer butter sales are expanding domestically and internationally well ahead of schedule,” Wyeth said.
Regarding the Chinese market, he said the team saw the market as being reasonably stable over the coming 12 months with balanced supply and demand.
But he added that they’re also positioned well in other international markets for “future growth”.